Utah is doing just fine with monopoly electric service, says a state legislator who oversees the Utah Public Utilities Commission. The legislator, Carl Albrecht, was responding to an op-ed appearing in the Deseret News the week earlier by Ethan Dursteler and me in which we encouraged Utahns to consider retail electric competition.
Albrecht is right that Utah does pretty well by the usual metric of price. He noted:
[W]e have a pretty good situation in Utah. Residential rates that rank 13th lowest in the country, commercial rates that are eighth lowest. These low rates are a major contributing factor to Utah attracting businesses and driving the No. 1 economy in the country. Let’s not fix what is not broken.
Those who would tamper with this natural monopoly would tamper with a model that has safely produced highly reliable electric service at prices well below the market in Utah for decades. If they persist, they should be prepared to explain exactly how they would prevent disasters similar to 2000-2001. How can we guarantee the same disaster would not occur again?
The spectre of “scary California failure” still hangs over discussions of retail electric competition, but only in states that remain regulated. No one in Texas or Pennsylvania or Maryland or New York worries about that admittedly quite spectacular failure. Even in states like Michigan, where the utilities constantly seek to squelch the small amount of competition allowed, nobody worries about a California-style failure.
The spectre of California is now well understood and easily avoided.
“Don’t fix what is not broken” is good advice. Utah is a hard case for proponents of retail electric competition because to the people in charge and to many of their customers, everything is fine.
Yes, as Albrecht said, the electric industry evolved into a natural monopoly for good reasons. But technology has changed and the one-time overwhelming benefits from economies of scale and scope no longer dominate. The costs of a system that hampers innovation are greater now than they once were. Time to rethink that century-old state policy decision.
The point we emphasize in our op-ed was that any one-size-fits-all policy is not going to properly respect that diversity of Utah citizens. Some Utahns are angry that Rocky Mountain Power (the only major company allowed to sell retail electric power for most of the state) continues to rely heavily on coal. Other Utahns are just fine with reliance on coal, so long as the company complies with environmental regulation and rates are kept low.
As several states show, it is possible to let consumers choose their own supplier. In our view, there is no longer good reason for the state of Utah to force the views of either group on those who disagree.